In mid-June, Federal Reserve Chairman Ben Bernanke made comments suggesting the central bank would begin to “taper” its extraordinary asset-purchasing activities designed to spur lending, inflation, growth, and employment in the economy. By announcing a slowdown to the process, financial markets have shown anxiety, and the recovery has started slowing. Here are five ways it might affect Las Vegas homeowners.

Interest rates on mortgages are up. In fact, the 30-year fixed mortgage rate climbed from about 3.5 percent in May to 4.5 percent in July. By far the biggest effect is that homeowners who were hoping to refinance their mortgages will be asked to pay a higher rate.

Similarly, mortgage modifications might be hampered by higher rates. Homeowners might not receive such a low rate for the same period of time.

Obviously, comments by Fed officials have no effect on housing programs administered by other branches of the government. For example, the Federal Housing Finance Agency’s Streamlined Mortgage Modification Initiative will continue as planned, allowing homeowners quicker access to mortgage modifications.

Homeowners hoping to sell or short-sell their homes will have harder time finding buyers, and they might have more trouble financing a new home purchase as part of the process as well.

Higher rates will reduce the rise in house prices. In some markets, banks are holding foreclosed homes off the market to affect prices, and they were also buying with an eye to renting them out. With the “taper” home prices won’t increase so quickly, which can cause both positive and negative results in Las Vegas. Those with underwater mortgages might see the rate of regained equity slowing down, but people entering into the market won’t pay as high prices. We obviously don’t need another land bubble.

Chairman Bernanke’s “taper” comment was clearly a step in the wrong direction for helping the economy recover. Be that as it may, if you owe more on your mortgage than your house is worth, then you should discuss your situation with a Las Vegas bankruptcy lawyer. Filing a chapter 7 bankruptcy can discharge an underwater second mortgage, and a subsequent chapter 13 filing can release its lien on your home.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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